Trade report 03/12/2013
ZAR outlook
USD/ZAR expected range: 10.2200 – 10.3700
The ZAR is under pressure today as fears of an early taper mount due to strong data out of the US and the disappointing news that SA’s current account is the largest it has been in 5 years. The Rand was at 10.2940/$ at 06:19GMT this morning, already 0.2% off its close in New York yesterday and looking to weaken even further during the course of the day.
Local news
Strikes and increased government spending have taken its toll on the economy as the Q3 current account deficit is now the biggest in 5 years. The market had expected the figure to come in at around 6.0% from the last quarter of 6.5%, but instead the figure expanded to 6.8%, highlighting the strain the economy is under and leaving the Rand exposed.
International news
Stronger than expected PMI data was released out of China, the US, the UK and the Eurozone yesterday. It is concerning that analysts also expect strong US nonfarm payrolls data to be released later in the week which would confirm that the US economy is doing well and increase speculation of the Fed starting QE tapering in the near future. This increases pressure on an already vulnerable ZAR, as South Africa is heavily reliant on foreign funding.
TODAYS KEY DATA POINTS (GMT):
• 08:00 SA Current account balance
• 09:30 SA Bond auction (R2030 – R550mn; R214 – R900mn; R2048 – R900mn)
• 09:30 GB PMI construction
• 10:00 EZ PPI y/y
• 14:45 US ISM New York
• 15:00 US IBD/TIPP economic optimism
• 18:00 EZ ECB’s Nowotny speaks
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